Chinese Steel Price, Iron Ore Price Shed Early Losses

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Chinese steel price and iron ore price shed early losses on Monday, while there were plentiful stockpiles of the steelmaking raw material in China.

Chinese iron ore futures rallied more than 1 per cent, as steel futures recovered after a three-day slide.

Construction-used rebar on the Shanghai Futures Exchange edged up 1.1 per cent to end at 3,696 RMB per tonne, after falling as low as 3,627 RMB earlier in the session.

On the Dalian Commodity Exchange, the most-traded iron ore contract for January delivery closed up 1.2 per cent at 470 RMB ($71) a tonne.

Coal futures outperformed. Coking coal jumped 2.9 per cent to 1,211 RMB per tonne, and coke climbed 4 per cent to 1,906 RMB.

Chinese steel rebar photo

But, as you may have known, plentiful stockpiles of the steelmaking raw material in China, which are at their highest since August, kept gains in iron ore price curbed.

Inventory of imported iron ore at China's major ports reached 138.48 million tonnes as of Friday, the most since Aug. 4, according to data compiled by SteelHome consultancy. 

China's iron ore imports declined nearly 23 per cent in October from a record level the previous month as mills braced for the production cuts. But China's own iron ore output last month rose 3.9 per cent from a year ago. 

Against weakening demand from steel mills, the increase in China's iron ore production "will only lead to less import appetite, weighing down on seaborne price," Argonaut Securities analyst Helen Lau said in a note.

"We remain bearish on iron ore price,"the analyst also said.

Demand for iron ore was likely to be cut as Chinese steel mills, mainly in the country's north, cut production during winter in line with Beijing's campaign against pollution, according to what the traders and analysts said. ($1 = 6.6340 RMB)

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